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Boards are dangerous to founder/CEOs

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Re: Boards are dangerous to founder/CEOs

#21

Post by notreallyserio »

PeterCorless wrote: post #11
vmception wrote: post #2

when you get thrown off of the board you still have your shares. so the trade is still successful by my rubric. I consider all things to be trades, whether I invested in a publicly traded equity, or whether I created a bunch of $0.00 par value shares to sell to a bunch of other people. the rule is the same: don't get married to a company. a board removing you doesn't need any fanfare. you still have the shares.

This is a very self-centered "I got mine" view. Think more broadly: What did you do to the valuation and perception of your company? What have you done to the value of everyone's shares, including your own? If you keep a role at the company, how will it be working with your team now that they see your position reduced? If you are walked out of the company without ceremony, what balls were in the air that aren't going…

If I'm fired I'm not the one leaving anyone in the lurch. I don't understand.

Re: Boards are dangerous to founder/CEOs

#22

Post by staunch »

Selling equity is one thing. Selling control is another.

When the founders have control, they're the leaders and directors have to follow. When the directors have control, they lead and the founders have to follow.

Generally, founders are more successful leaders of their own companies.

Re: Boards are dangerous to founder/CEOs

#23

Post by cle »

0des wrote: post #16

It may be gauche to express this opinion on HN of all places and I hope it doesn't come off as tonedeaf disrespect, but does anybody notice VC is falling out of favor unless absolutely necessary? I am noticing a lot of bootstrappers that are emerging with the ethos that VC isn't what it used to be for some markets, and often a poor choice of the right VC can be a detriment to a project's longevity, with some teams ch…

The signal-to-noise ratio is getting lower and the risk is getting higher of choosing the wrong investors, and having the wrong investors pushing your company in undesirable directions to meet LP expectations can be really frustrating, at the least.

Re: Boards are dangerous to founder/CEOs

#24

Post by adventured »

0des wrote: post #16

It may be gauche to express this opinion on HN of all places and I hope it doesn't come off as tonedeaf disrespect, but does anybody notice VC is falling out of favor unless absolutely necessary? I am noticing a lot of bootstrappers that are emerging with the ethos that VC isn't what it used to be for some markets, and often a poor choice of the right VC can be a detriment to a project's longevity, with some teams ch…

I agree that is happening more often in the initial stages. And with a bit of experience/reputation you can command very favorable terms in the early stages of a start-up, at least in the present climate where seed type funding is relatively very easy to come by.

Or let's say you don't have much money and you want to avoid early VC due to loss of control and hefty dilution. In the US market, move to a college town (often quite safe), take a part-time $15 / hr retail job (CVS and Walgreens are both moving to that minimum in 2022; both are better than fast food and easier than Walmart type jobs), get a modest cost apartment ($650-$750), walk/bus/bike to work (no car expenses), keep your bills under $1k-$1.2k per month, build your start-up on Hetzner (new Virginia datacenter). Self-fund, build your thing, don't take early venture capital, maximize your leverage later on. Maybe occasionally do some side contracting work if necessary to fill up the personal treasury (10 hr per month or less).

The counter argument to that is primarily the speed angle, get bigger faster or get crushed by the VC funded crowd, and similar arguments. It likely varies by the case as to whether a given approach makes more sense or less (eg depending on what you're building, time to market may not be so much of the essence, or it may be critical).

Re: Boards are dangerous to founder/CEOs

#26

Post by anthropodie »

ChuckMcM wrote: post #10

This is something you should really understand if you're starting a company. The board isn't your "friend" while individual board members may be, as an entity it probably isn't. The understanding that individuals can be "good" and the composite can be "bad" is usually encountered by most people when some government is doing something "bad" but the people who live where that government is in power are known to be "goo…

“A group experience takes place on a lower level of consciousness than the experience of an individual. This is due to the fact that, when many people gather together to share one common emotion, the total psyche emerging from the group is below the level of the individual psyche. If it is a very large group, the collective psyche will be more like the psyche of an animal, which is the reason why the ethical attitude of large organizations is always doubtful. The psychology of a large crowd inevitably sinks to the level of mob psychology. If, therefore, I have a so-called collective experience as a member of a group, it takes place on a lower level of consciousness than if I had the experience by myself alone.” - Carl Jung

Re: Boards are dangerous to founder/CEOs

#27

Post by dcow »

ChuckMcM wrote: post #10

This is something you should really understand if you're starting a company. The board isn't your "friend" while individual board members may be, as an entity it probably isn't. The understanding that individuals can be "good" and the composite can be "bad" is usually encountered by most people when some government is doing something "bad" but the people who live where that government is in power are known to be "goo…

This is also why it's very very important for early employees to have their own lawyer review employment agreements. The CEO may be your best buddy and may promise to never fuck your over, but at a certain point they will report to the board and no longer be in full control. You should be weary of promises that simply cannot be kept. Your only option is to make the employment agreement 100% explicit even if it costs the company an extra round trip with legal. (Similar if a company offers to have their lawyers go over the employment agreement with you to save you some $$... there's an intense conflict of interest here that I'm surprised is even allowed.)

Re: Boards are dangerous to founder/CEOs

#28

Post by StriverGuy »

dangrossman wrote: post #18
0des wrote: post #16

It may be gauche to express this opinion on HN of all places and I hope it doesn't come off as tonedeaf disrespect, but does anybody notice VC is falling out of favor unless absolutely necessary? I am noticing a lot of bootstrappers that are emerging with the ethos that VC isn't what it used to be for some markets, and often a poor choice of the right VC can be a detriment to a project's longevity, with some teams ch…

I don't think that's a new sentiment around here. Anything published by 37Signals and its founders used to be mandatory reading on HN, and they were all about small teams eschewing outside investors. Their Getting Real book was published in 2006.

Interesting you avoided calling them basecamp given the recent media fallout. Not saying you did it intentionally, but just rare anyone refers to them as 37Signals much anymore.

Re: Boards are dangerous to founder/CEOs

#29

Post by toomuchtodo »

onion2k wrote: post #12
throwaway55421 wrote: post #6

If you give up your 51% share, sure.

51% isn't quite right. For a start, it's really "more than 50%", which is often 50% + 1 share, but in some structures there are different classes of shares with different voting rights. It's common to have a pool of voting shares that are issued to founders and preferred investors, and then non-voting shares that are issued to everyone else. There can also be shares that confer more than 1 vote to the owner. You real…

Common shares can also have one vote, or more than one but less than individual founder shares, with loss or decline in votes upon transfer.

Re: Boards are dangerous to founder/CEOs

#30

Post by mattkevan »

anthropodie wrote: post #26
ChuckMcM wrote: post #10

This is something you should really understand if you're starting a company. The board isn't your "friend" while individual board members may be, as an entity it probably isn't. The understanding that individuals can be "good" and the composite can be "bad" is usually encountered by most people when some government is doing something "bad" but the people who live where that government is in power are known to be "goo…

“A group experience takes place on a lower level of consciousness than the experience of an individual. This is due to the fact that, when many people gather together to share one common emotion, the total psyche emerging from the group is below the level of the individual psyche. If it is a very large group, the collective psyche will be more like the psyche of an animal, which is the reason why the ethical attitude…

“The intelligence of the creature known as a crowd, is the square root of the number of people in it.”

- Terry Pratchett

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